Rich Pickings: Australia’s emerging culture of philanthropy takes shape
Last week, hedge fund manager John Paulson – the man lauded for making billions by picking the start of the sub-prime disaster – hit the headlines across the world when he gave $100 million to the trust that runs New York’s Central Park.
It’s a staggering figure and one of the biggest donations to any New York cultural organisation.
Yet arguably a more generous donation was made in Sydney last week. And it received very few headlines outside of Australia.
John Grill, the long-time CEO and major shareholder of engineering giant WorleyParsons, announced he was giving $20 million to his alma mater, University of Sydney, to fund a school of project management.
While project management doesn’t necessarily compare with Central Park on the sexy donations scale, Grill’s generosity in this instance certainly compares favourably with Paulson’s.
Paulson’s donation represents just 0.9% of his $11 billion fortune.
Grill’s donation represents 2.8% of his $725 million fortune.
While there will be many who say that proportionally, Grill’s donation doesn’t exactly break his personal bank, this comparison does go to show that big fat headline numbers don’t always tell the whole story.
Could the comparison also call into question the commonly held opinion that Australia’s wealthy have a long way to go before they measure up to the generous upper class of America?
Well, not quite, according to legendary fund manager and philanthropy sector leader Chris Cuffe.
Cuffe is the founder of Australian Philanthropic Services, a not-for-profit dedicated to helping wealthy Australians and their advisers understand what he calls “structured philanthropy”, where an individual creates a vehicle to manage their giving.
He says that while the argument rages about how generous Australia’s rich really are, comparisons with the US are largely unfair.
“In Australia, at least, it’s too early to know if we should beat up our rich for not being generous enough. The US has completely different circumstances,” Cuffe says.
The biggest difference is death duties, which encourage the wealthy to give their money away before they die and a big portion goes to the government.
But Cuffe argues it’s more than that. Giving is ingrained for the rich in America and the returns are often far more than a warm fuzzy feeling.
“Our money is newer and they’re money is older. But philanthropy is like the soft currency at social tables or in the big boardrooms. There is real pressure to give.”
There is also a strong infrastructure around philanthropy in the US, stemming from the fact that wealth advisers also have expertise in the sorts of vehicles that best suit giving.
“We have a lack of understanding of that area,” Cuffe says. He says it is very hard for would-be philanthropists to get advice on whom to give to and he also argues that charities in Australia could do more to be transparent.
“I’m not of that camp that Australians are stingy. But I do say you’ve got to remove these speed humps,” Cuffe says.
“There’s been more work done on addressing those issues in the last three or four years than ever before.
“My hope is that within a few years people will understand structured philanthropy in the way that everyone knows about self-managed super.”
Cuffe is making inroads. He says Australian Philanthropic Services, which he describes as the only independent not-for-profit in the space, has grown to the point where it is setting up one in three private ancillary funds (PAFs), which are the vehicles commonly used in Australia for philanthropic efforts.
PAFs operate in a similar way to a trust and have a few distinct requirements: 5% of the fund’s balance must be distributed each year and the fund must have a proper investment strategy.
“Every week we are meeting with wealth advisers and wealth houses that are looking for help with philanthropy. All of this stuff is starting to be talked about.”
Whether talk has converted into action remains a question.
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